October Cleveland Deals Page

Albert D. Melchiorre, President, MelCap Partners, LLC

There are no statistical indications that private equity groups are making a concerted effort to buy companies as the number of deals closed by PEGs in the first half of 2012 was approximately 650. This is considerably lower than last year’s total closings of 1,893, according to Pitchbook. Furthermore, the dollar value of invested capital by PEGs in the first two quarters of 2012 was the worst since the fourth quarter of 2009. Yet despite all of that, fundraising is showing better results in the first half of 2012 than it has over the same time period in the last three years.

Regarding the domestic M&A market, the number of closed transactions through July and August is on pace to be down 9 percent from the second quarter of the year and down 13 percent from the first quarter. Domestic M&A transaction dollar values are also on pace to be down 9 percent from this year’s second quarter and slightly down from the quarterly average since the beginning of 2010.

Despite the reduced investment activity of private equity groups, local strategic buyers put cash to use this month with the following acquisitions: Nordson Corp. acquired Sealant Equipment & Engineering Inc.; Parker Hannifin Corp. purchased SciLog Inc.; Applied Industrial Technologies Inc. acquired SKF Bearing Supplies and SKF New Zealand; and Aleris Corp. purchased a German company. 

As for local private equity groups, Linsalata Capital Partners completed the sale of Stanton Carpet Corp. The Riverside Co. exited its eighth company this year by selling Health & Safety Institute. Riverside also purchased the U.S. food ingredients distribution business of Centerchem and bought Orthodontic Design and Production in Vista, Calif. 

Supply Chain Equity Partners acquired a majority stake in Storage Battery Systems Inc., a specialty distributor of battery-backed critical power products based in Milwaukee. Evolution Capital Partners purchased Lewellyn Technology in Linton, Ind.

With respect to Northeast Ohio deal announcements, Eaton Corp. and A. Schulman Inc. announced acquisitions. Shearer’s Foods Inc. announced a sale to two private equity groups. TMW Systems Inc. announced its sale to Trimble Navigation Ltd. for $340 million. And finally, OrthoHelix Surgical Designs of Medina announced that it will be acquired by global medical device company Tornier N.V. for $135 million in cash and Tornier stock. <<

ALBERT D. MELCHIORRE is president of MelCap Partners LLC, a middle-market investment banking firm. He is also a director on the ACG Cleveland board. For more information on MelCap Partners, please visit www.melcap.co. For more information about the Association for Corporate Growth, please visit www.acg.org/cleveland.

Deal of the Month

Goldsmith & Eggleston Inc. of Wadsworth was sold to international company The Ravago Group through Ravago Holdings America. G&E was established in 1968 and operated as an employee-owned company. It manufactures and distributes reprocessed rubber raw materials and black masterbatch for a variety of diverse industries, mainly the global rubber industry. Included in the sale was Reliable Polymer Services, a reprocessing rubber facility in Port Arthur, Texas.

The combined revenue of G&E and Reliable Polymer Services is estimated to be under $90 million with an estimated 140 employees, according to Dun & Bradstreet. Ravago is a global leader in the distribution, resale and compounding of commodity, engineering and specialty plastic and rubber polymers. Ravago employs more than 4,500 people, controls more than 200 subsidiaries in 50 different countries and serves more than 40,000 customers. The Ravago Group is based in Brussels, Belgium.  <<